If you have a job today, chances have never been better that you can keep it as long as you want.
There’s been a lot of attention to the “Great Resignation,” the record number of people quitting their jobs amid the pandemic’s upheavals. More than four million workers quit their jobs every month from July through October, according to the latest available data from the US Labor Department. The number of employees voluntarily walking out the door has never topped that mark before.
But what isn’t getting as much attention is the other end of that spectrum: firings and layoffs have essentially ground to a halt.
“Employers are hanging onto workers for dear life,” said Julia Pollack, chief economist for Ziprecruiter.
Only 1.36 million people lost their jobs in October, just barely higher than the 1.35 million who were let go in May, when that reading hit a record low.
The latest tally shows that there were 227,000 fewer firings and layoffs than even the pre-pandemic low reached September 2016. And it’s down nearly 30% from the average number of layoffs and firings, even excluding the spike in layoffs that occurred in March and April of 2020 at the start of the pandemic.
With new weekly jobless claims hitting a 52-year low, it’s very likely that the November and December readings for terminations and layoffs will set even more new records, Pollack said.
The math is simple: there are far more job openings than job seekers. Employers realize how hard it is to fill jobs and are willing to hang onto workers they otherwise might have let go in the past.
The Labor Department data shows there are 0.67 job seekers for every job opening – or three job openings for every two people looking for work. That’s by far the worst ratio for employers since the Labor Department started tracking job openings in 2000.
The lowest ratio on record was 0.81 job seekers for every opening, which occurred in September and October of 2019, when the unemployment rate stood at a 50-year low. That works out to about four job seekers for every five openings – not good for those looking to fill jobs, but not nearly as bad as the current imbalance.
Typically, the average ratio is more than two job seekers for every opening, meaning that in normal times a boss can fire an employee and be assured of finding a suitable replacement quickly, and at not much more cost.
Not today. Hiring a new employee to replace a fired worker in the current labor market might very well mean paying a higher salary, according to Pollack.
“Companies are loath to make any cuts. They’re hanging onto everyone they can,” said Andy Challenger, senior vice president at Challenger, Gray and Christmas, the job placement firm that tracks layoff announcements. Its data shows layoffs at the lowest point since 1993.
That includes people who might be late regularly, or who are making mistakes in their work, he added.
“If they let someone go, the alternative is no one is doing the work,” he said. “That would affect their sales, their growth.”
There are exceptions, of course. Even in the current environment more than 1 million workers are losing their jobs every month. The highest profile example recently was mortgage firm Better.com, whose CEO laid off 900 workers in a Zoom call that lasted less than three minutes, prompting widespread criticism, multiple apologies and his own leave of absence from the company.
But the current level of layoffs and firings reflects less than 1% of workers losing their jobs ever since May, a record low rate. “That’s about as low as it can go,” said Challenger.
Pollack said that many employers are now looking to improve the work and productivity of workers who once might have been let go, putting in place “performance improvement plans,” for those employees.
“In the past, if you were put on one of those plans, it was often a way to build a case for dismissal,” Pollack said. “But now it makes sense for employers to do everything they can to improve the performance of an employees.”
Such a shift could ultimately be good for the employee, the employer and the economy.
“I don’t think it means we will have a work force of malingerers and underperformers,” Pollack said. “More investment in training is a good thing. I think it is a huge positive for workers. It means they have second chances. It means they’re given a chance to grow and learn and improve.”
Challenger and Pollack both said the labor shortage reflects the fact that 2.4 million fewer people are in the US labor force, either in a job or looking for work, than there were at this time two years ago.
Many people who left the labor force during the pandemic have yet to return, perhaps because of health concerns or child care needs. And some, such as those who retired early during the pandemic, may never return.
“Right now the economy is trying to move forward full bore with a huge hole in the labor market,” Challenger said.